Glu Mobile Inc.GLUU is set to release first-quarter 2017 results on May 3. Last quarter, the company delivered a negative earnings surprise of 30%. However, in the trailing four quarters, the company posted an average positive earnings surprise of 6.67%.
Let's see how things are shaping up for this announcement.
Factors at Play
Glu Mobile’s roster of celebrity games is one of its biggest positives. Its super successful game Kim Kardashian: Hollywood continues to be a big contributor to revenues.
Recently, the company launched MLB Tap Sports Baseball 2017 in partnership with Major League Baseball Players Association (MLB). The game is available both on App Store and Google Play.
However, growing competition from established players like Electronic Arts EA and Activision Blizzard might make it difficult for the company to register strong growth. Further, significant investment in research and development of new games will likely be a headwind for the company and put pressure on margins.
We note that Glu Mobile has underperformed the Zacks categorized Toys - Games - Hobbies industry in the past one year. The company’s shares have decreased 15.1% compared with the industry’s gain of 33.7% during the period.
For the first quarter of 2017, Glu expects booking to be in the band of $53 million to $55 million. Adjusted operating margin is expected to be in the range of $43.6 million to $44 million.
Earnings Whispers
Our proven model does not conclusively show that Glu Mobile is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Glu Mobile has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 9 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Glu Mobile Inc. Price and EPS Surprise
Glu Mobile Inc. Price and EPS Surprise | Glu Mobile Inc. Quote
Zacks Rank: Glu Mobile’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are a few companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases: